DE Nora India Ltd Management Discussions

ECONOMIC OVERVIEW

The global economy continued to face significant challenges during the year amid heightened geopolitical tensions, evolving trade dynamics and persistent macroeconomic uncertainties. While investment in technology, accommodative financial conditions and supportive fiscal and monetary policies provided resilience to economic activity , the outbreak of conflict in the Middle East towards the end of February 2026 introduced fresh risks to global growth through its impact on energy markets, nflationi expectations and financial conditions. Global growth is projected at 3.1 % in 2026 and 3.2% in 2027, compared to an average growth rate of approximately 3.4% during 2024- 25. Global inflation is expected to remain elevated in the near term due to supply-side disruptions and commodity price volatility arising from geopolitical developments. Emerging market and developing economies are expected to face greater challenges, particularly those dependent on commodity imports and those with existing macroeconomic vulnerabilities . The global economic outlook continues to be characterized by uncertainty, with risks arising from geopolitical conflicts, trade-related disputes , inflationary pressures, financial market volatility and fiscal imbalances. At the same time, increased investment in technology and artificial intelligence, easing trade tensions and structural reforms across economies may provide support to global growth over the medium term. The Indian economy demonstrated resilience in FY 2025- 26 amidst a challenging global environment characterised by geopolitical turbulence and fragmented trade conditions. Domestic economic activity continued to be supported by resilient private consumption, sustained investment activity, robust services exports and continued government capital expenditure. According to the First Advance Estimates, ndias real GDP and GVA for FY 2025-26 were projectedI to grow by 7.4% and 7.3%, respectively. Monetary policy remained supportive of economic activity during the year. nflationI moderated significantly, with average headline inflation at 1. 7% during April-December 2025, supported by easing food and fuel prices. The banking sector remained resilient, with gross non-performing assets declining to a multi-decade low, supported by healthy credit growth and strong capital positions. Financial inclusion continued to deepen through expanded banking access, increased digital financial transactions and growing retail participation in capital markets. ndias externalI sector remained resilient despite global trade uncertainties. Strong services exports, robust remittance inflows and continued foreign investment supported external sector stability. While the Indian Rupee experienced periods of volatility and depreciation pressures during the latter part of the year amid global trade uncertainties, portfolio outflows and geopolitical developments, Indias substantial foreign exchange reserves and prudent macroeconomic management helped maintain overall stability . ndias growth outlook remains positive, supported by strongI domestic demand, ongoing infrastructure investments, manufacturing-led initiatives, digital transformation and structural reforms. The outlook is influenced by climatic factors, particularly the forecast of a sub-normal south-west monsoon and the potential impact of El Nino conditions. While geopolitical tensions , elevated energy prices, supply chain disruptions, commodity price volatility and global trade uncertainties present downside risks to growth, Indias robust macroeconomic fundamentals, resilient financial system and policy focus on sustainable growth position the economy well to navigate these challenges.

(Source: IMF World Economic Outlook April 2026, Economic Survey 2025-26 and RBI Monetary Policy Report-June 2026)

COMPANY OVERVIEW

De Nora India Limited (DNIL), a key player ni the electrochemical sector, primarily serves the chlor-alkali industry through the manufacture and recoating of anodes and cathodes used in the electrolytic production of caustic soda and chlorine-critical components in a wide array of industrial and consumer applications. The Companys product portfolio also includes proprietary NRG? coating technologies for the chlor-alkali industry, LIDA? anodes for cathodic protection, platinized titanium and GREENCHROME™ anodes for surface finishing, and electrochlorination systems for water disinfection. Backed by proprietary technologies from ts parent,i lndustrie De Nora S.p.A., DNIL holds a prominent market share in India and continues to provide advanced technical and process support to its customers across electrolytic industries. In FY 2025-26 , DNIL navigated a challenging macroeconomic environment marked by geopolitical tensions, inflationary pressures, and supply chain disruptions. These factors have had a material impact on the Companys financial performance. Despite this, DNIL remains committed to its long-term vision of delivering sustainable, innovative solutions to meet evolving industrial and environmental needs. The Company continues to draw strength from its global affiliation, operational resilience, and dedication to customer satisfaction, positioning itself to rebound as conditions stabilize.

DE NORA GROUP lndustrie De Nora S.p.A. (hereinafter the "Parent Company" and together with ts subsidiaries the "De Nora Group") isi a joint-stock Company incorporated and registered in taly.I The registered office of Parent Company is located at Via Bistolfi 35, Milan, taly I . The Parent Companys ordinary shares have been istedl on the Euronext Milan market since June 30, 2022. Founded in 1923 by Oronzio De Nora, the De Nora Group has over a century of experience in the field of electrochemistry. Electrochemistry wouldnt have been the same if Oronzio De Nora hadnt had the visionary intuition which brought him to register his first patent in 1923. Today, the De Nora Group is a leading global provider of sustainable electrochemical technologies and a world leader in technologies for the production of chlorine and caustic soda, as well as one of the worlds largest suppliers of electrodes for the electrochemical industry.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The chlor-alkali industry in India is an important component of the basic chemicals industry. Caustic soda, chlorine alongside hydrogen, soda ash and hydrochloric acid comprise the chlor-alkali industrys components. These chemicals find their applications in several industries such as textiles, chemicals, paper, PVC, water treatment, alumina, soaps & detergents, pharmaceuticals, glass, chlorinated paraffin wax etc. Emerging Application also includes EV Batteries & Recycling, Electronics & Semiconductors.

The various technologies, which are being used in the chlor-alkali industry, include mercury , membrane cell and diaphragm cells. In India, membrane cell technologies are widely used for caustic soda production.

Most of the modern medicines today rely on chlor-alkali chemistry for part of their production process for which is likely to favour ancillary industries of chlor-alkali.

Chlor-Alkali industries are adopting upgraded membrane cell zero-gap technologies to reap benefits of lower power consumption per ton of caustic produced such as nX- BiTAC, e-BiTACv7 & BM2.7v6plus, BM2.7v7 electrolyzers. DNIL is also the leading service provider of anode and cathode elements used in these latest zero gap technology membrane cell electrolyzers. DNIL performs recoating and mechanical repairs to the anode and cathode half shells and retrofitting with zero gap solution to cathode structure used in the membrane cell technology of the chlor-alkali industry . The dynamics of the chlor-alkali industry has a considerable effect on the overall performance of the Company.

DNIL is the industry leader ni technology and in this continuing challenging environment DNIL has made extra efforts to keep cell technology competitive by reducing power consumption and is continuously redefining ts businessi model to maintain margins and to best deliver value to its stakeholders by ensuring continuous improvement ni productivity and good financial performance.

OPPORTUNITIES AND THREATS

The Goa factory is equipped with all the necessary equipment and facilities to meet the demands of the chlor- alkali industry. The Company continues to remain the market leader in the chlor-alkali and cathodic protection systems business. We aim to further strengthen our presence ni this strategic area. The main activity of the Company is dependent on recoating electrodes for membrane cell electrolyzers in chlor-alkali plants, which is cyclic in nature because the life of the coating lasts for 6 to 8 years.

The income from recoating business contributes a major share in the Companys total income. The mercury cell plants have gradually been converted to membrane cell plants. The Company does not get the business of anode/ cathodes coating at this conversion stage since these are inbuilt in the new cells and the complete set of cell elements are imported by the customers. The Company is not in the business of manufacturing membrane cell elements and the recoating business in respect of these anode/cathodes will happen only after 8 years.

The chlor-alkali market in India is undergoing consolidation in recent years and entry of newer technology suppliers has put the Company in more challenging environment to continue to maintain its market share.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

In accordance with the requirements of Ind AS 108 - Operating Segments, the Company has identified Electrode Technologies as ts only reportable segment. This decisioni has been taken by the Chief Operating Decision Maker (CODM), considering the nature and scale of the Companys operations. For the financial year ended March 31, 2026, the Company has recorded a gross turnover of Rs. 12,162.31 lakhs from the sale of its products. Accordingly, the financial results have been presented for a single segment, and no separate segment information is disclosed.

OUTLOOK

The outlook for De Nora India Limited remains positive, driven by strong fundamentals within the Indian caustic soda industry and the Companys leadership in electrochemical technologies. The domestic caustic soda sector continues to operate in a ongl position, with capacity additions outpacing demand growth. As per the Annual Industry Review 2024-25 by AMAi, the industry is projected to grow at a CAGR of approximately 8% from FY 2024-25 to FY 2029-30, supported by steady consumption from end- use industries such as textiles, alumina , pulp and paper, and pharmaceuticals. This trend is expected to generate sustained demand for advanced maintenance and service solutions in the chlor-alkali ecosystem.

In this environment, De Nora India Limited is well-positioned to leverage ts niche capabilities in membrane recoatingi and cathodic protection systems. The Company continues to hold a strong market position in ndia and is activelyI expanding tsi presence across South East Asia, which remains a key growth region. With capacity expansions across the chlor-alkali sector, there is a growing need for reliable, efficient, and high-quality technical services-an area where DNIL has built a reputation for excellence. The Company remains focused on innovation, process optimization, and customer-centric service delivery to maintain its competitive edge.

Additionally , increasing environmental regulations and the growing emphasis on operational safety across the chemical industry are likely to drive demand for De Noras specialized offerings. While external factors such as energy cost volatility and chlorine management challenges persist in the industry, DNILs commitment to sustainable practices and its technical expertise position t well to navigate thesei headwinds. Overall, the Company is optimistic about its growth prospects in FY 2026-27 and remains committed to delivering value to stakeholders through operational excellence and strategic expansion.

RISKS & CONCERNS

Risk management remains an integral part of DNILs business framework and s deeply embedded across alli operational and decision-making processes. The Company has instituted a comprehensive Risk Control Matrix to monitor, evaluate, and address key risk exposures. The framework is regularly reviewed by the Board of Directors and the Audit Committee, while the Senior Management team led by the Managing Director takes responsibility for proactive mitigation and implementation of appropriate control measures. During FY 2025-26 , the global business environment continued to face heightened volatility driven by multiple external factors. The prolonged Russia-Ukraine conflict, along with ongoing geopolitical tensions in various regions, has contributed to economic slowdowns across several developed and emerging economies. These macroeconomic challenges may impact global chlorine- alkali investments and, in turn, affect downstream service demand from key customers in India and South East Asia.

Supply chain risks remain another key concern, particularly with respect to the availability of critical raw materials, extended lead times for imports , and changing mporti policies in India. These factors can impact project timelines and operational efficiency. In addition, volatile raw material prices-especially for materials sourced internationally-can affect the Companys input costs and margins, despite the service-oriented nature of its business.

The Company is also exposed to risks arising from changes in environmental and regulatory frameworks. Increasing compliance requirements across global markets, including enhanced scrutiny on industrial effluent and emissions, require DNIL to continuously align its offerings with evolving standards. Any delay in compliance, or inability of customers to meet these standards, could indirectly impact service volumes and project schedules.

Additionally, the longer duration between service cycles for membrane elements creates revenue concentration risk, as DNILs recoating operations rely on a relatively small number of high-value projects, which are often deferred or advanced based on customer-specific timelines. In this context, any postponement of scheduled recoating or plant maintenance activities by clients may significantly affect short- to medium-term revenue visibility.

The risk of technological disruption also persists, as emerging trends in electrochemical systems, automation, and digital monitoring may alter traditiona l service models. While DNIL continues to invest in innovation and operational improvement, staying ahead of such technological changes remains an ongoing priority .

n conclusion, while the business is exposed to both cyclicalI and external risks, De Nora India Limited has established a structured approach to risk identification and mitigation. The Company remains confident in ts ability to manage thesei challenges through prudent planning, strong customer relationships, operational efficiency , and a disciplined risk management framework.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The responsibility for establishing and maintaining adequate internal control lies with the Management of the Company. This internal control mechanism comprises a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes. The Company also has an Internal Audit function to provide reasonable assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, reliability of financial records and reports and compliance with applicable laws and regulations. To ensure and review the effectiveness and implementation of the systems and operations, the Audit Committee regularly reviews them, and further initiates corrective actions wherever deemed necessary.

The application system for the business is backed by an integrated SAP Accounting System which provides complete integration of all transactions including financial transactions and statements. Processes and systems are subject to Internal Audit through an annual internal audit plan approved by the Audit Committee. These are further supported by the Statutory Auditors who validate that the financial reporting is true and fair. The results of all audits are discussed with the Senior Management and reviewed by the Audit Committee on a quarterly basis.

FINANCIAL PERFORMANCE

The financial results of the Company for the year under review are detailed in the Directors Report. Profit before tax for the year under review stood at Rs . 1,199.97 lakhs as compared to Rs. 275.56 lakhs in FY 2024-25. Profit after tax increased to Rs. 905.54 lakhs from Rs. 169.29 lakhs in the previous financial year . Earnings Per Share (Basic and Diluted) for the year ended March 31, 2026 increased to Rs. 17 .06 as against Rs. 3.19 in FY 2024-25, reflecting the significant improvement in the Companys profitability during the year

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

At De Nora India, our people remain at the core of sustainable business growth and long-term value creation. We believe that building a future-ready organization requires continuous investment in talent, capability enhancement, employee well-being, and a culture rooted in engagement, accountability , and inclusion. As a listed organization operating in a dynamic environment , we remain committed to strengthening our human capital through learning and development initiatives , leadership building, employee engagement, safety and wellness programs, and workplace practices that enable employees to thrive.

During the year, our focus remained on building an agile, high-performing, and future-ready workforce while fostering a safe, collaborative, and growth-oriented work environment . Some of the key initiatives undertaken during the year are highlighted below:

National Safety Week Celebration: Safety continues to be a core value at De Nora India. National Safety Week was observed from 4th to 10th March 2026 with nitiativesi aimed at reinforcing awareness and strengthening a safety- first culture across the organization. Activities included a poster-making competition on the theme "Safety at Work", encouraging employees to promote safe workplace practices through creative expression.

To encourage active employee participation, a Safety Suggestion Drop Box was introduced to capture ideas for improving workplace safety. In addition, various safety awareness and capability-building nitiatives werei undertaken to reinforce preparedness and promote safe workplace practices. These efforts reflect our continued focus on prevention, employee awareness , and continuous improvement in workplace safety.

International Yoga Day Celebration: As part of our commitment to employee well-being, De Nora India celebrated International Yoga Day on 21st June 2025, through a dedicated yoga session focused on promoting physical wellness, mindfulness, and mental well-being. The initiative encouraged employees to embrace healthy practices and highlighted the importance of maintaining balance in both personal and professional life .

De Nora India Recognized as a Great Place to Work?:

During the year, De Nora ndia proudly achieved the GreatI Place to Work? certification, reaffirming our commitment to fostering a workplace culture built on trust , collaboration, inclusion, and employee well-being. This recognition forms part of the De Nora Groups achievement of being certified across six countries, reflecting a shared global commitment to creating an engaging and people-centric work environment.

Based on employee feedback, the certification reinforces the importance of listening to our people and continuously enhancing the employee experience. This achievement strengthens our focus on creating a workplace where employees feel valued, empowered, and inspired to learn, grow, and contribute to the organizations continued success.

International Womens Day Celebration: At De Nora India, we believe that an inclusive workplace drives innovation and long-term success. On the occasion of International Womens Day , employees came together to celebrate and recognize the contributions of women across the organization. The celebration served as a reminder of our continued commitment to diversity, inclusion, and creating an environment where every individual is empowered to succeed.

Innovation Reward Celebration & Training Session:

De Nora India celebrated ts achievement of securing 2ndi place in the De Nora Group Innovation Awards, recognizing the innovative spirit and collective efforts of employees. To mark this milestone, an Innovation Reward Celebration cum Training Session was organized, followed by an ODP session titled "Focus for Success" aimed at strengthening personal effectiveness, goal setting, and productivity. The initiative reflected our continued commitment to innovation, capability development, and continuous learning.

Driving Digital Capability Through Al: De Nora continues to accelerate its digital transformation journey by promoting the responsible and effective use of Generative Al across the organization. Building on the adoption of Microsoft Copilot, the focus has expanded to increasing employee awareness, enabling business use cases, strengthening Al governance, and integrating Al ntoi everyday work practices. These initiatives support productivity, innovation, and the responsible use of emerging technologies.

Through these initiatives, De Nora India continues to invest in developing a resilient, engaged, and future-ready workforce while creating meaningful experiences that support employee growth and organizational success.

As on March 31, 2026, there were 45 permanent employees on the rolls of the Company.

Employee & Industrial Relations

The Company continued to maintain cordial and harmonious industrial relations across the organization through a culture of mutual trust, open communication, and constructive engagement . Any concerns raised during the year were addressed proactively and resolved amicably through continuous dialogue with the workmen and union representatives, contributing to a positive and stable workplace environment.

The year remained free from any untoward incidents, reflecting the strength of employee relations and workplace discipline. The Company also encouraged active participation from employees , workmen, and the union in initiatives focused on improving productivity, operational excellence, and product quality.

The HR team remains committed to enhancing employee engagement, driving high performance, ensuring employee satisfaction, and sustaining motivation across all levels of the organization to support sustainable business growth.

KMPs/Senior Management Personnel & Other Staff

As recommended by the Nomination and Remuneration Committee (NRG), the Board has adopted a Remuneration Policy for KMPs / Senior Management Personnel. The remuneration is recommended by the NRG after considering factors such as industry benchmarks, the Companys performance in comparison with the industry, and the performance and track record of the KMPs/Senior Management Personnel.

The remuneration paid to other staff is determined based on their grade, role, and position within the Company , along with their experience, qualifications, skills, and competencies. The Company follows a global Compensation System (CS), led by Human Resources, with the objective of:

• Remaining competitive to attract and retain talent across the local job markets in which DNIL operates.

• Ensuring fair compensation based on accountability and merit .

• Recognizing and rewarding strong and outstanding performance and business contribution.

The overall objective is to maintain a compensation framework that motivates employees, supports performance excellence, and drives long-term organizational success.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY

Environmental, Social and Governance (ESG) factors are at the core of De Noras values and strategy and represent a long-term commitment that the Group intends to strengthen through several initiatives and projects. We believe that every step we take can have a positive impact on shaping a cleaner future, at DNIL we have done some changes in packing procedure of shipment to eliminate/ minimize usage of thermocol.

DNIL is evaluating opportunities to harness renewable energy sources in the near future through the strategic initiatives of the Government of Goa, towards reducing carbon footprint .

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or predictions or industry conditions or events are forward-looking statements within the meaning of applicable laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Important factors that would make a difference to the Companys operations include demand-supply conditions, raw material prices, changes in government regulations , tax regimes, economic developments within the country and outside the country and other factors such as litigation and labour negotiations.